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Morning business news - April 4

During his monthly press conference yesterday, European Central Bank president Mario Draghi sarcastically thanked the IMF head Christine Lagarde for her advice that the bank should do more to try to stave off deflation. But the bank offered little yesterday other than the promise to act and to use unconventional measures to stimulate growth in the euro zone economy.

John Finn, managing director of Treasury Solutions, says that deflation is a big threat because so much in an economy is linked to prices, including wages. He says that compared to the US and UK, Europe has acted much slower to relation to the economic crisis. The US Federal Reserve pumped billions into the US economy at an early stage of the crisis and also reduced interest rates to record lows. The Bank of England also launched its QE programme and its interest rates have stayed at 0.5% for the past five years. In comparison, the ECB cut rates more slowly and when other central banks were cutting, actually increased rates at one stage during the crisis.

Mr Finn says that the money the ECB has managed pumped into the euro zone economy has not trickled down to the "real economy" and is staying within the financial sector. He predicts that the ECB will cut rates to 0.1% by June, adding that the results from the euro zone banks' stress tests will also be a key area of focus for the ECB in the coming months.

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